Maybank Investment Bank has given its review on Cahya Mata Sarawak's ESG matters post release of its FY23 Annual & Corporate Governance Reports. The ESG score for CMS has been updated by the investment house to 21 (out of 100) vs. 18 in its last review which was recorded as below average.

The house said CMS lacks measurements and disclosure on key environmental parameters (which it said is addressing) and tangible mid/long-term targets, including carbon neutrality / net zero commitments. Maybank however maintains a BUY on CMS with an unchanged MYR1.60 TP based on 10x FY25E PER.

Sustainability Framework developed
In 2023, CMS developed its Sustainability Framework and Roadmap for 2023-25 and prepared towards reporting needed under the TCFD by end2025. On environmental matters, the group will focus on: i) enhancing organisational readiness via policies and management plans; ii) measuring and establishing GHG emissions and energy management baseline and targets; iii) improving waste and water management performances; and v) integrating environmental performance evaluation into its supply chain management. Future reporting on key environmental parameters will bemore detailed with the establishment of its Sustainability Framework.

Additional measures on governance
Additional measures and actions have been taken to bolster governance which included: i) Group Managing Director and Board of Directors taking responsibility for the group's Anti-Bribery & Anti-Corruption Policy and anti-corruption programme, and ii) integrating anti-corruption clauses in the procurement and tender contracts. The group's procurement process is governed by its Procurement Policies & Procedures Manual, and Group Limits of Authority which are available for internal reference

More still needs to be done
Another positive in 2023 was the Singapore Green Label certification for the group's Portland Limestone Cement CEM II/B-LL 32.5N product. Overall, while we see traction in managing its ESG matters, more needs to be done including measuring and disclosing on key environmental parameters, and tangible mid/long-term targets. It would also be good if CMS establishes and shares its carbon neutrality / net zero commitments.